Innovation is key as Australia’s food manufacturing sector comes to a critical crossroads



Australia’s food and grocery manufacturing sector is currently at a three-lane crossroads, where it faces the fortunate prospect of potentially doubling in value by 2030 to reach A $ 250 billion (A $ 188 billion US dollars) – but also the potential gloomy scenarios of stagnation or decline if no changes are made in terms of government policy and investment priorities.

As it stands, exports of food and groceries play a major role in Australia’s trading activities – exports amounted to A $ 36.7 billion (US $ 27.7 billion) in 2018/19, with the country capitalizing heavily on the health and quality connotations of ‘Brand Australia’ – but this advantage may not last forever.

“From Australia [longtime] The ‘clean and green’ reputation will not be enough to ensure that our sector remains competitive in domestic or export markets in the future ”, Tanya Barden, CEO of Australia Food and Grocery, said FoodNavigator-Asia.

“[What is important from now to ensure] growing the sector is a significant investment – in new product development, sustainable packaging, advanced manufacturing and digital technologies – to drive competitiveness, agility and resilience. In addition to this, you need to know more about it.

This sentiment was also highlighted in the commissioned ACEC Sustaining Australia: Food and Grocery Manufacturing 2030report by research firm EQ Economics. The report found that while the sector has great potential, it faces a number of challenges in reaching that potential by 2030.

“[The sector is] under the pressure of declining profitability due to high costs and a highly concentrated retail market, [faces] an uneven playing field thanks to foreign governments offering significant financial incentives and non-tariff barriers to export trade, [and overall] risk of losing its global competitiveness ”,said the authors of the report.

“Without innovation and new investments, this vital sector could stagnate or even decline.In addition to this, you need to know more about it.

The report presents three potential scenarios for the sector, the first of which is high growth, a very optimistic scenario in which the value of the sector doubles by 2030, but can only be achieved if the government takes important measures such as policy and regulatory reforms, allocation of additional funds and investments, and new national strategies for exports and digitization.

“[Swift action by the government can] stem the trend of increasing import penetration and position Australian food and grocery manufacturers to take advantage of the many export opportunities resulting from a rapidly growing global middle class, particularly in Asia ”,say the authors.

The main priority areas to focus on to achieve this scenario include the development of technologies such as AI to reduce the speed of new product development, automation and robotics to reduce production costs, digital traceability systems for provenance and R&D for sustainable packaging.

Speed ​​is the name of the game here with 2030 less than 10 years away, but plenty of big changes to be implemented – and failure to meet those needs will lead to industry stagnation / confusion, or outright decline. and simple.

“Australian food and grocery manufacturing is strong, dynamic and critically important, but there are important decisions that need to be made now regarding the future of the sector.”said Barden. In addition to this, you need to know more about it.

“[If no changes are made to policy settings], based on past trends, the Muddle Through scenario will see F&B manufacturing achieve an annual growth rate of around 2.7%, from A $ 130 billion in 2020 to A $ 170 million in 2030, [but] this would be a significant underperformance given Australia’s demographic and economic expansion, and import penetration will continue to increase.In addition to this, you need to know more about it.

“[Worst though] will be the decline scenario where Australian manufacturers [are edged out] by 2030, food and drink imports will reach nearly 40% of domestic demandIn addition to this, you need to know more about it. – [this]In addition to this, you need to know more about it. a gradual decline would lead to increased relocation of production and job losses.In addition to this, you need to know more about it.

Funds needed to avoid stagnation or declineIn addition to this, you need to know more about it.

While it is encouraging to think that the sector has the chance to double its value within a decade if it embarks on the path of strong growth, the list of recommendations made by the ACEC to the government in order to avoiding stagnation or decline is long and significant. expensive, with goals difficult to achieve in just 10 years.

For example, it has been estimated that in order to meet its target of A $ 250 billion (US $ 188 billion), the industry will need an additional A $ 75 billion in CAPEX investment, almost double the value of CAPEX. of the last decade.

This is a huge amount of money, especially given the most recent government funding initiative, the Modern Manufacturing Initiative (MMI) only allocated A $ 1.5 billion (1, $ 14 billion) of funding to be shared among six sectors over four years, so not even all of this will go to F&B manufacturing.

The AFGC called on the government to implement co-investment grant programs to cover research on sustainable packaging, digital technologies in manufacturing and also funding to conduct skills audits and training – but how much the government will actually be able to afford remains to be seen.

This is especially the case after Australian Treasurer Josh Frydenberg recently revealed that the federal budget’s cash flow shortfalls will remain large over the next several years, given spending of around A $ 311 billion (AU $ 235.9 billion). dollars) to fight COVID-19.

Right now, the report realistically estimates Australia’s food and grocery manufacturing trajectory to situate it somewhere between scenarios of confusion and decline – so hopefully with a bit of d help, it could still be brought closer, even if it does not fully reach the high growth. scenario.



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